How Much (More) Should CEOs Make? A Universal Desire for More Equal Pay

Area of Science:

• Social Psychology
• Economics
• Sociology

Background:

• Significant disparities in wealth and income distribution exist globally.
• Understanding public perception of economic inequality is crucial for policy-making.
• Previous research has explored attitudes towards income, but cross-cultural data on perceived vs. ideal pay gaps is limited.

Purpose of the Study:

• To investigate cross-cultural preferences for pay gaps between high-earning and low-earning individuals.
• To compare public perceptions of current pay disparities with their ideal pay structures.
• To assess the extent to which people underestimate actual income inequality worldwide.

Main Methods:

• Utilized survey data from 55,238 respondents across 40 countries.
• Collected data on respondents' estimates of wages for various occupations (CEOs, cabinet ministers, unskilled workers).
• Compared estimated wages against respondents' ideals for what these wages should be.

Main Results:

• Ideal pay gaps between skilled and unskilled workers were consistently smaller than estimated pay gaps across all surveyed groups.
• Strong consensus on ideal pay gaps was observed irrespective of country, socioeconomic status, or political beliefs.
• Respondents in 16 countries dramatically underestimated actual pay inequality; the US showed particularly pronounced underestimation.

Conclusions:

• Individuals globally perceive pay gaps to be smaller than they are and desire even smaller gaps.
• There is a widespread, cross-cultural ideal for reduced income inequality.
• Public perception of pay inequality is significantly misaligned with reality, with a notable underestimation of actual disparities.